I've got to say that I like the diversity of companies that are the subjects of some recent initial public offerings, especially those outside the glut of health care and technology offerings. That does not mean I'm buying any of them shortly after their debuts; this market is pricey and that froth is often priced into IPOs. I'd rather wait until the luster of the newest shiny object wears off, but they give me more names to follow.
The latest IPO is well-known grill maker Weber Inc. (WEBR) (unfortunately, the ticker GRIL was already taken by Muscle Maker Inc.), which made its debut last Thursday. In a world of "keep them for four or five years before they fall apart" outdoor grills, Weber sets itself apart. I've had the same Weber grill in my backyard for 20 years; you pay more, but the quality is worth it. I can't tell how many of the cheaper gas grills I've owned over the years and thrown out. Weber claims a 24% global market share of the grill market.
Weber is another name that ended up pricing its IPO below its initial expected range, selling its shares at $14 rather than the expected $15 to $17. Weber also reduced the size of the offering, originally expected to be 47 million shares, down to 17.9 million.
Weber shares opened trading last Thursday at $17, closed at $16.50, and ended Tuesday's trading above $19. Weber's current market cap is about $5.5 billion; pro-forma net debt was about $1.1 billion as of March 31, so Weber's current enterprise value (EV) is around $6.7 billion.
Weber generated $1.5 billion in 2020 revenue (its fiscal year ended last September) and earned $88.4 million. The past six months saw revenue jump 62% year over year to $963 million with net income of $74 million. While I've yet to see any earnings estimates, if the company could get to $2 billion in revenue this year it would be trading at 2.75x revenue. If Weber could manage $150 million in 2021 net income, it would be trading at 37x earnings.
One reason Weber downsized its offering may be that another high-end grill name, Traeger Inc. (COOK) , went public on July 29 at $18 a share. COOK opened trading at $22 and closed Tuesday, its ninth day of trading, at $31.65, up 76% from the IPO price.
